How Analysts View General Electric after Its 3Q17 Earnings
General Electric (GE) has a consensus rating of 2.41 from analysts surveyed by Thomson Reuters, representing a “buy.” Of the 17 analysts covering GE, five analysts (29.4%) recommended a “strong buy” for GE stock.
Three analysts (17.6%) gave a “buy” recommendation on the company, and six analysts (35.7%) suggest a “hold” for the stock. Three analysts (17.6%) have a “sell” opinion on the company.
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Analysts’ price target for GE
GE has a consensus target price of $26.80 per share, reflecting a return potential of 15%. Its peers’ price targets and return potential figures follow:
- 3M (MMM) has a price target of $211.20.
- United Technologies (UTX) has a target price of $126.20 with a return potential of 4.3%.
- Illinois Tool Works (ITW) has a target price of $155.10 with a return potential of 0.1%.
- Honeywell International (HON) has a price target of $153.10 with a potential return of 5.3%.
If you are interested in exposure to large-cap stocks, you can consider the SPDR S&P 500 ETF (SPY). General Electric comprises 0.9% of SPY’s holdings.
Why are analysts divided on GE?
A few days before GE’s 3Q17 earnings announcement, J.P. Morgan’s C. Stephen Tusa, a GE bear, said, “While many view any change at GE as a positive, because apparently, it was really bad for the 15 years during which many sell-side bulls were saying how good it was, we don’t think to appoint an activist who is stuck changes much…In our view, an activist heightens the risk that GE tries for a quick fix like it has done in the past.”
General Electric could incur significant restructuring costs and pension-related costs in the coming quarters. Its margins are under pressure, the result of too many restructuring charges. On a year-over-year basis, the company’s margins have decreased in recent quarters.
GE’s chairman and CEO, John Flannery, is scheduled to disclose his outlook in November 2017. There is a possibility of a portfolio review triggering divestitures of underperforming segments, which may include its Energy Operations and Transportation businesses.
During its 3Q17 earnings call, GE revealed its intention to target more than $20.0 billion in business exits over the next year or so.